Medicare to go broke three years earlier than expected, trustees say

Medicare’s hospital trust fund is expected to run out of money in 2026, three years earlier than previously projected, the program’s trustees said in a new report published this afternoon.

The more pessimistic outlook is largely due to reduced revenues from payroll and Social Security taxes and higher payments than expected to hospitals and private Medicare plans last year.

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The solvency report is the first since the repeal of Obamacare’s Independent Payment Advisory Board earlier this year as part of a massive spending agreement in Congress. The panel of outside experts was designed to tame excessive Medicare spending growth, but costs never grew fast enough to trigger the controversial board and no members were ever appointed.

Social Security faces depletion in 2034, the program's trustees also said today. That's identical to last year's projection.

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President Donald Trump has avoided major changes to Medicare or Social Security after promising not to cut them during the campaign. Trump has argued a growing economy would forestall cuts to the programs, but today’s report underscored the financial challenges facing the nation‘s entitlements as more baby boomers reach eligibility age.

The Medicaretrust fund only pays for Part A, which covers hospitalizations. The other main pieces of the program, covering physician visits, outpatient services and prescription drugs, are paid for primarily with general fund revenues.

In 2017, Medicare covered 58.4 million people, 85 percent of them seniors, at a cost of $710.2 billion. The report also showed that Medicare's total costs will grow from 3.7 percent of GDP in 2017 to 5.8 percent by 2038.